UK: Buoyant housing market lifts first half profits at Bovis
- Credit: PA
A buoyant property market helped Bovis Homes to soaring first half profits today as the housebuilder said even the heatwave failed to melt demand.
Greater confidence and improved access to mortgages, together with the Government’s Help to Buy scheme, have boosted the sector, Bovis said.
The upturn delivered pre-tax profits for the first six months of the year up 19% to £18.6 million and the group said the positive trend had even continued into recent weeks at a time when the property market traditionally slows down.
Early weeks of the third quarter had seen “good sales rates and a less pronounced summer lull in reservations than in previous years” amid a robust trading environment and a growing sense of confidence in the market, the company said.
In the first half, excluding land sales, operating profits were up 50% on the same period last year to £20.4 million, amid higher sales volumes, stronger profit margins and a rise in market prices of up to 2%.
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The 32-week period to August 9 saw a 43% rise in private reservations to 1,712 homes as Bovis increased the number of sales outlets.
Chief executive David Ritchie said: “This improvement has been further assisted by the positive effect of stronger home buyer sentiment, supported by the Help to Buy scheme launched in April 2013.”
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The programme enables those who have only a 5% deposit to buy new-build homes with the help of Government loans. It is being extended next year. However there are fears in some quarters that it could stoke a housing market bubble.
Mortgage availability has meanwhile been boosted by the Bank of England’s Funding for Lending scheme, which provides cheap credit to lenders in exchange for them providing mortgages as well as small business financing.
Bovis said sales of homes for completion in 2013 had reached 2,505 in the 32-week period, a rise of 36%. It meant it was now nearly 90% sold for completions this year.
Competions were up 2% to 963 for the first half of the year, with the average sales price compared to last year up 15% to £188,500, reflecting an improving mix of homes.
Mr Ritchie said: “The positive trading position, combined with an increasing proportion of legal completions on new, more profitable sites, will enable the group to improve profits significantly in 2013 in line with expectations, subject to stable market conditions.”
Kent-based Bovis raised its interim dividend by 33% to 4p per share.
It said: “The general UK economy remains weak, but is showing initial signs of a recovery in growth. In the first half of 2013 the UK housing market has been measurably stronger than in 2012.”
Bovis said it had acquired around 12,000 plots with planning consent, at around 80 new sites, since the housing market downturn.
With the majority in the south of England these were expected to deliver stronger sales prices and profit margins.